Indian shares fell for the second day to end 0.7 percent lower on Wednesday, knocked down by world equities, as rising fears over global economic recovery triggered a flight to safety. A one-notch downgrade of Ireland's debt rating by Standard & Poor's and an unexpected plunge in US existing home sales on Tuesday strengthened worries over the health of world economy.
The Indian central bank's comments late Tuesday that it might have to give precedence to containing inflation over other policy objectives as rising prices were a major concern, weighed on financial stocks. The Reserve Bank of India also said in its annual report that the country needs to be cautious while formulating policies in the current fiscal year due to the uncertain global environment though India's growth outlook remained robust.
The 30-share BSE index closed 0.72 percent or 131.95 points lower at 18,179.64 points, with 23 of its components closing in the red. The index has still logged a gain of 4.1 percent year to date, outperforming its peers such as Brazil's Bovespa, Russia's RTS index and China's Shanghai Composite Index which are down between 3.5 percent and 20.8 percent. Foreign funds have pumped in $12.6 billion in Indian equities so far in 2010, adding to the record $17.5 billion in 2009 which had led to a rally of 81 percent in the benchmark index.
Oil companies were in focus again tracking developments on the future of Cairn India ownership. Cairn India closed 2.8 percent lower, while ONGC firmed 0.4 percent. Leading lender State Bank of India dropped 0.8 percent and private sector rivals ICICI Bank and HDFC Bank declined 1.7 percent and 0.6 percent respectively.
Non-ferrous metals producer Sterlite Industries bucked the trend and climbed 1.1 percent. Losers outpaced gainers in the ratio of 2.5:1 on a relatively lower volume of 412 million shares. The 50-share NSE index declined 0.8 percent to 5,462.35 points.
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